Goldman Sachs Flips on Fed Hike Forecast Again, Now Sees Another Rate Increase in October

Goldman Sachs has changed its Federal Reserve rate hike forecast twice in four days. Initially, it expected no hike until September's decision, then reversed to a two-hike baseline after Fed Chair Kevin Warsh refused forward guidance and the dot plot showed rising inflation projections.

The updated rate projections, higher inflation forecasts, and Warsh's comments that the summer's readings had not given him enough evidence that underlying pressures were improving led Goldman to expect another 25-basis-point increase in October. This shift from expecting September to be the year's only hike has significant implications for Bitcoin (CRYPTO:BTC) and XRP (CRYPTO:XRP).

Bitcoin gained 18% over the past month, but an October hike carries no pricing cushion unlike the fully anticipated September move. An October increase would reach markets with less time to adjust than after September's decision, raising returns on government debt and pushing borrowing costs higher.